Proponents of legalized sports betting had to be feeling confident after last Monday’s oral argument inNCAA v. Christie — the so-called New Jersey sports betting case, in which leagues including the NFL, the NBA and Major League Baseball are seeking to prevent the state from permitting such gambling. The general consensus among those in attendance was that the Supreme Court appears poised to invalidate the Professional and Amateur Sports Protection Act (PASPA), the 1992 federal law that bans states from authorizing or licensing sports betting.

By my count, at least five justices — John Roberts, Anthony Kennedy, Neil Gorsuch, Samuel Alito and, surprisingly, Stephen Breyer (one of the court’s more liberal members) — indicated that they believed PASPA violates the 10th Amendment’s anti-commandeering principle, which forbids the federal government from commanding the states to implement federal laws or policies that would interfere with state sovereignty.

Skepticism Among The Justices

The key for Justice Breyer and the other "New Jersey-leaning" justices was that PASPA dictates how states are to regulate their residents in the area of sports wageringwithout setting forth any federal regulatory or deregulatory scheme. In their view — if the oral argument was any indication — a federal law such as PASPA can properly preempt an inconsistent state law (such as New Jersey’s partial repeal of its sports-betting prohibitions) only when it imposes a scheme of federal regulation or deregulation, rather than just flatly prohibiting a state from authorizing a particular activity.

As Justice Breyer observed during the oral argument, "there is no federal policy against authorizing sports gamblingbut fora federal policy that says astatecan’t authorize sports gambling." In that scenario, he added, "the subject matter of the law is thestate, telling states what to do, and therefore, it falls within commandeering."

Additionally, Justice Kennedy (the swing vote in many divided court rulings) remarked that PASPA’s regulation-less prohibition "blurs political accountability" because "the citizen doesn’t know [if] this is coming from the federal government, [or whether] this [is] coming from the state government." Justice Kennedy declared that this is "precisely what federalism was designed to prevent."

Emphasizing this point even further, Justice Kennedy asked the leagues’ attorney, Paul Clement (a former U.S. solicitor general), whether there were any other federal laws that operated upon states in this fashion (e.g., prohibiting state action without setting forth any federal scheme of regulation or deregulation). Clement could not identify another such federal statute — a very telling moment.

From the tenor of the oral argument, with only Justices Elena Kagan, Sonia Sotomayor and Ruth Bader Ginsburg appearing to credit the leagues’ argument that PASPA is a straightforward preemption law, one could easily envision a decisive victory for New Jersey. A 6-3 margin sounds about right — at least that’s my prediction.

But what will a victory for New Jersey look like? There are several options here for the court to consider: It could either declare PASPA unconstitutional or, instead, conclude that New Jersey’s partial repeal law (which seeks to remove all state-law prohibitions against sports betting at casinos and racetracks) does not constitute an "authorization" of sports gambling. Remember, PASPA only forbids a state government from sponsoring, operating, advertising, promoting, licensing or authorizing by law a sports gambling scheme. New Jersey has long maintained that its partial repeal law is not a PASPA-forbidden "authorization" because the subject law simply lifts criminal prohibitions on sports gambling rather than "affirmatively authorizing" that activity.

What A Victory Could Look Like

The general sense in the courtroom last Monday was that the Supreme Court was prepared to go all the way on PASPA — that is, declare it to be unconstitutional under the 10th Amendment’s anti-commandeering principle. If that were to occur, it could open the floodgates for sports betting nationwide. As many as 15 states have already introduced legislation that would allow sports betting within their borders if PASPA were repealed by Congress or invalidated by the Supreme Court. (I refer to these as "placeholder bills" that would spring to life if and when PASPA is repealed.)

Thus, a Supreme Court win for New Jersey on constitutional grounds could create a snowball effect by the start of the 2018 NFL regular season (if not sooner) and lead to the rapid proliferation of state-sanctioned sports gambling across the country.

But is there a path forward for the Supreme Court other than a complete or partial invalidation of PASPA? The court’s newest member, Justice Gorsuch, seems to think so. During an exchange with Ted Olson (counsel for Governor Chris Christie of New Jersey), Justice Gorsuch reminded him that New Jersey had previously argued in the lower federal courts that its partial repeal law was not an "authorization" within the meaning of PASPA. He questioned why the state had abandoned that argument at the Supreme Court. Justice Gorsuch then asked Olson whether New Jersey would "take a win on statutory grounds" — e.g., that the partial repeal does not constitute an "authorization — especially given the Supreme Court’s longstanding preference to interpret statutes "in ways to avoid constitutional difficulties."

Justice Sotomayor also suggested that the case could be decided through the lens of statutory interpretation, saying that if PASPA "permits repeals of all kinds — partial or complete, partial or not partial — we avoid the constitutional question.’

A Difficult Distinction

As highlighted during the oral argument, the "constitutional difficulty" in this case centers on the issue of "severability." The leagues have correctly pointed out that New Jersey is challenging onlyoneof PASPA’s prohibitions — § 3702(1)’s proscription against states "authorizing by law" sports gambling — but has not challenged the other five prohibitions in that subsection (sponsoring, operating, advertising, promoting and licensing), nor has New Jersey challenged § 3702(2)’s separate prohibition against private parties operating sports gambling schemes "pursuant to state law."

Thus, the leagues argue that even if § 3702(1)’s prohibition against state authorization of sports gambling is held to be unconstitutional, states would still be prohibited fromsponsoring, operating, advertising, promoting and licensingsports gambling schemes. Likewise, private parties would be forbidden from engaging in any of those activities (aside from licensing, which would not apply to private parties) under state law. In other words, even if New Jersey were to succeed in knocking out § 3702(1)’s prohibition against state authorization of sports gambling, PASPA would still, as described inthe leagues' brief, "independently prohibit casinos and racetracks from relying on [New Jersey’s partial repeal law] to engage in the conduct that federal law forbids."

The severability issue was raised by several of the justices at the oral argument. The key question on severability, as posed by Justice Gorsuch, is: Would Congress have enacted 3702(2)’s prohibition against private parties operating sports gambling schemes without § 3702(1)’s prohibition against state authorization of that activity?

Calling that "a very hard question to answer," Justice Gorsuch suggested that the court could look at the "budget impact" that the two separate prohibitions posed on the federal government. He observed that the § 3702(1) prohibition (directed only against states) "does not cause any budget impact on the federal government," as contrasted with the § 3702(2) prohibition (directed only against private parties), which "is a direct regulation by the [federal] government and, therefore, might cost money." Based on this disparate budget impact, Justice Gorsuch surmised that one could envision Congress saying that it makes sense to enact § 3702(1) but that it was "only going to vote for (2) because of (1)."

Although Justice Gorsuch was skeptical that the two provisions could be severed, Clement, the leagues’ attorney,urged the court to focus on the other prohibitions contained in § 3702(1)— sponsoring, operating, advertising and promoting — that New Jersey was not challenging in this case. Clement reasoned that even if the Supreme Court were to invalidate § 3702(1)’s prohibition against state authorization of sports gambling on constitutional grounds, the net effect of such an interpretation would be that "states [still] can’t sponsor, operate, advertise [or] promote sports gambling schemes, and neither can private parties pursuant to state law." Under this savings interpretation, Clement added, "the statute operates almost the same way" by banning private parties (e.g., casinos and racetracks) from offering sports gambling in reliance on state law.

Justice Breyer, however, laid a trap for Clement, asking him to provide a "one-sentence answer" to the following question: In enacting PASPA, "Congress wanted the United States to [fill in the blank]?" To which Clement responded that Congress wanted "no state-sponsored or -operated gambling taking place by either individuals or by the state." Justice Breyer quickly seized on Clement’s answer, reminding him that he used the term "state-sponsored," which "means legislation, and therefore, there is no interstate policy other than the interstate policy of telling the states what to do." Clement then asked — to uproarious laughter in the courtroom — whether he could amend his answer.

Along those same lines, Justice Alito observed that “Congress could have prohibited sports betting itself" [meaningallsports betting] rather than just prohibit state-sponsored betting, so he asked Clement to identify the federal policy that is served by PASPA that would not have been served by an outright prohibition on all sports betting. Clement responded that "ironically enough, [PASPA] actually furthers federalism values by saying, instead of having a one-size-fits-all policy which says as a matter of federal law everybody who operates a sports gambling scheme is going to face two years in the federal penitentiary and a fine of $10,000, this statute basically says, look, 46 states right now are more or less doing what we want, but they’re doing it in 46 different ways.”

Justice Gorsuch then interjected, asking Clement to explain how PASPA could serve the interest of "making it cheap" by allowing the federal government "not to have to expend any funds to enforce its laws." Through this question, focusing on his "economic impact" of the two provisions, Justice Gorsuch seemed to be expressing even more doubt that § 3702(2) of PASPA could be severed from § 3702(1).

But with only three of the nine justices weighing in on the severability issue, a reading of the entire court on this issue remains somewhat elusive. Certainly, New Jersey is off to a good start on the severability question, with Justices Roberts, Gorsuch and Breyer strongly hinting that § 3702(2) cannot be severed from § 3702(1). And that makes perfect sense when you consider the expressed legislative purpose underlying PASPA: to stop the spread ofstate-sponsored sports betting.

PASPA was enacted out of a desire to prohibit states from sanctioning sports betting within their borders. The private party prohibition expressed in § 3702(2) is wholly derivative of the prohibition against states in § 3702(1), as made evident by the plain language of the statute. It is difficult to envision that Congress would have enacted PASPA with just § 3702(2) when you consider the legislative history of the statute, which is replete with references to stopping the spread of state-sponsored sports gambling, and the undeniable fact that several other federal laws — namely, the Wire Act and the Interstate Gambling Business Act — already prohibit individuals and entities from operating sports gambling schemes.

Nevertheless, the court appears at least to be concerned with the severability issue, judging from the amount of time and attention devoted to this issue during oral argument. While Clement is clearly playing from behind on this issue — basically having to convince five out of the six remaining justices that the two prohibitions are severable — there may be some appeal to his suggestion that even with the elimination of the "authorization by law" language in § 3702(1), there is still enough meat left on the PASPA bone to say that states still can’t sponsor, operate, advertise or promote sports gambling schemes and neither can private parties pursuant to state law. If a majority of the court were to agree with Clement’s assertion, a New Jersey victory on constitutional grounds might prove to be an especially hollow one, since private operators might still be constrained by § 3702(2) of PASPA from offering sports gambling in reliance on New Jersey’s partial repeal law.

One way for the Supreme Court to resolve this conundrum — in keeping with the court’s longstanding preference for interpreting statutes in a manner that would avoid "constitutional difficulties" — would be to decide the case on the purely statutory grounds suggested by Justices Gorsuch and Sotomayor. Under this approach, the court could sidestep the severability quagmire and conclude simply that New Jersey’s partial repeal law does not rise to the level of an authorization under PASPA. After all, this is the argument that New Jersey consistently advanced in the lower federal courts before curiously abandoning it at the Supreme Court. Such a narrow ruling might be the path of least resistance, and perhaps the most likely outcome.

What A Narrow Ruling Could Mean

A New Jersey victory on purely statutory grounds would not necessarily be a welcome development outside the state. Think about it: What state, other than perhaps New Jersey, would go so far as to decriminalize and deregulate sports gambling within its borders? Virtually every form of state-sanctioned gambling in this country — e.g., casino gambling, horse racing, lotteries, etc. — is subject to heavy state regulation and oversight. Other states (except perhaps New Jersey’s regional competitors) would understandably be reluctant to follow New Jersey’s path of decriminalization. Thus, a Supreme Court ruling on statutory, non-constitutional grounds would likely benefit only New Jersey in the short term, by allowing New Jersey operators to offer sports gambling right away without having to face immediate competition from other states.

Such a narrow ruling, however, could soon open up another avenue for legalized sports betting: the quest for new federal legislation to replace PASPA. Under a hypothetical Supreme Court ruling on statutory grounds, with states being offered only the unpalatable option of repealing their state-law prohibitions against sports betting and with the sports leagues facing the very real prospect of unregulated sports betting within close proximity to the sizable New York and Philadelphia markets, all stakeholders would be motivated to quickly pursue new legislation at the federal level, even if they disagreed — at least for now — on the optimal regulatory approach.

If that were to happen, the New Jersey sports betting case might be remembered not for immediately opening up the floodgates for nationwide sports gambling, but for being the straw that finally broke the PASPA camel’s back.